LLOYDS Banking Group chief executive Eric Daniels yesterday bowed to populist acrimony over City remuneration by becoming the fourth major bank boss in a week to surrender his contractual bonus for the year.
Daniels had been entitled to a potential maximum payout of £6.5m for the 2009 financial year, of which just £1.04m represents his fixed salary.
Lloyds insiders had already indicated that their chief was unlikely to cash in a £3.1m long-term incentive payout due to continuing weakness in the bank’s share price, though Daniels could still have collected a discretionary bonus of up to £2.33m in addition to his salary.
The pacifying move was seen as inevitable by many in the City after RBS chief executive Stephen Hester on Sunday decided to waive his own £1.6m bonus, following the lead of Barclays chief John Varley and president Bob Diamond, who set the bar for executive pay at their bank’s annual results last week.
One banking analyst said yesterday that the issue had become “like a game of dominoes”, with the actions of one bank boss leading inescapably to the others following suit.
“Given that the other banks have accepted the situation, it seemed entirely untenable for Lloyds not to do so,” he said.
People close to Daniels insisted the decision did not represent Lloyds “jumping on the bandwagon” but rather an attempt to prevent the thorny issue of remuneration overshadowing proceedings when the bank reports annual figures on Friday.
Lloyds is expected to post a loss of between £4bn and £5bn for 2009, and is thought to have earmarked around £200m to pay out in staff bonuses – a considerably lower figure than its peers because of the group’s focus on retail and commercial banking.
RBS, which is expected to make a pre-tax loss of around £5bn-£6bn, is set to get the green light from the government to pay out up to £1.3bn in staff bonuses – equivalent to around 28 per cent of revenues.